Hours after the terrorist attacks of Sept. 11, 2001, insurance companies, realizing their enormous exposure to loss from the disaster (ultimately, close to $40 billion), filed for terrorism risk exclusions in property insurance policies. Within weeks, more than 40 state insurance departments had agreed.

Suddenly, companies across the U.S., from high-profile targets in New York to midsize lumberyards in Indiana, either could not obtain terrorism insurance or could not afford the new stand-alone policies that quickly materialized in the wake of the attack. More than a year later, the federal government finally came to the rescue with the Terrorism Risk Insurance Act (TRIA) as a "temporary Federal program that provides for a transparent system of shared public and private compensation for insured losses resulting from acts of terrorism."

Under TRIA, the U.S. government assumes 90% of losses caused by foreign terrorist attacks, up to $100 billion a year, above specified deductibles paid by insurers. But insurers are required to make terrorism coverage available, and a recent survey by insurance broker Marsh Inc. shows nearly 50% of companies accepting the coverage, almost double the number the year before.